Windows Phone to overtake the iPhone? It will happen.

The iPhone is the schoolyard bully and Windows Phone the 99-pound weakling, right? Wrong. By 2017 Windows Phone will nearly overtake the iPhone, says a new report. And after that, it's anyone's guess.

A new Canalys report says that by 2017, the iPhone will have a 14.1 percent market share, with Windows Phone nipping at its heels, with a 12.7% share. In 2012, the report says, the iPhone had a 19.5% market share, and Windows Phone a 2.4 percent market share. Android dominates now and will dominate in the future, with a 67.7 percent market share in 2012, and a 67.1 percent market share in 2017.

Windows Phone will make big gains and the iPhone will lose market share because the iPhone will continue to sell at premium prices, while Windows Phone will attack the budget phone market, Canalys says. About the iPhone, Jessica Kwee, Canalys Analyst, says:

"Apple's growth will be curtailed by the fact that momentum in the smart phone market is coming from the low end, and Apple is absent from this segment."

As to why Windows Phone will grow so quickly, she explained:

"The scalability of Microsoft's platform will be critical to its success and it has made progress here by enabling Huawei and Nokia to deliver Windows Phone products at aggressive price points."

Canalys points to Nokia's success with its Lumia line as a short-term spur to growth. But in the long term, Chinese manufacturers will be Windows Phone's saviors, Kwee concludes:

"Longer-term it is the Chinese vendors that are best placed to challenge Samsung's market dominance. Microsoft already has a relationship with Huawei and ZTE in the phone space, and Lenovo is a major partner in the PC space. These partners will be needed to help deliver the scale that Microsoft needs."

They'll all build affordable Windows Phone devices. The tech press rarely pays attention to reasonably priced smartphones, because they typically don't have the fastest processors, highest resolutions, or best cameras. But that's where big growth is going to be. Chris Jones, Canalys Principal Analyst, explains:

"As component prices continue to fall, vendors will be able to deliver great experiences on smart phones at low price points, which means that in many markets, feature phones will become extinct."

Windows Phones are becoming popular with first-time smartphone buyers, who are typically budget-minded. Those are the people who will be flooding into the market over the next several years, Canalys says. A recent Kantar Worldpanel ComTech's report found that's the best demographic for Microsoft. Kantar Worldpanel ComTech analyst Mary-Ann Parlato said:

"Windows strength appears to be the ability to attract first time smartphone buyers, upgrading from a featurephone. Of those who changed their phone over the last year to a Windows smartphone, 52% had previously owned a featurephone...with over half of the US market still owning a featurephone, it's likely that many will upgrade over the coming year, which will ultimately contribute to more growth for the Windows brand."

If by 2017, Windows Phone is within a point or so of the iPhone, you could reasonably expect the unthinkable to happen not too far after that: Windows Phone will outsell iPhones Of course, a low-cost iPhone mini could change the equation. But Apple has shown no inclination to play at the low end of any market. It remains a premium brand for which one pays premium prices. So don't be surprised if Windows Phone does eventually overtake the once-mighty iPhone.

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